Promoting New Exports: Experience from Industry Case Studies
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information is thus the greatest hurdle in initiating a new export activity (Klinger 2007). Entrepreneurs in the case studies overcame these uncertainties in four ways: • Some entrepreneurs partnered with firms that had the required knowledge by entering a formal licensing agreement or forming a joint venture. • Other entrepreneurs resolved uncertainty through subsidies from the input supplier, who was motivated by cultivating downstream demand. • Many entrepreneurs simply assumed the higher risks and absorbed the costs of uncertainty alone. • In a few cases, public support—in the form of export promotion, technical assistance for firm restructuring, or knowledge transfer—was critical in the initial stages of business, predominantly for the (few) entrepreneurs with no previous knowledge of the export business or foreign demand. Exporters did not mention any policy-induced business constraints. The only pertinent investment climate constraint for new export discoveries cited in the case studies was limited access to finance. Almost all entrepreneurs reported difficulties in acquiring financial resources to start their new business within the domestic financial system. Although all the entrepreneurs eventually obtained the necessary financing—mostly from private resources—the financing constraints had several consequences, including delayed investment, high personal risk, and dependence on informal financial resources. Except in the few cases mentioned above, government support played only a minimal role in the discovery process. One could therefore conclude that public support is not critical during the discovery phase. However, many entrepreneurs pointed out that initial support—through export promotion schemes, competitiveness programs, innovation grants, and so forth—was just not available to them.
Diffusion and the Fear of Imitation From a social perspective, the imitation of a successful export discovery is desirable, because it fosters the development of export sectors and economic growth. But as Klinger and Lederman (2009) note, the incentives for exporters to experiment may be reduced by the possibility that